Prodigy Finance has raised $40 million in equity funding from leading London venture capital funds Index Ventures and Balderton Capital, as well as African fintech accelerator AlphaCode.

An unnamed "global" investment bank is providing a further $200 million debt facility to help it finance loans to postgraduate students from developing and emerging market who are studying overseas.

London-based Prodigy Finance helps promising students in places like India, China, and Africa fund their university studies by connecting them with rich alumni who will loan them money based on future earning potential. Founded in 2007, Prodigy has financed $325 million of loans over its platform, helping 7,100 students.

CEO and founder Cameron Stevens told Business Insider: "A mix of funding is important. We started off exclusively community funded, as we called it. If we could get all of funding from the community that would be amazing but really we face huge demand we have to meet and ability to scale the funding is key."

The platform has partnered with top universities around the world including London Business School, Oxford, Cambridge, INSEAD, Stanford, Wharton, and Harvard. Large markets for students applying for loans on the platform include India, Brazil, Russia, China, and Turkey.

Stevens told BI: "Typically we partner with the universities and what that means is our major acquisition channel is the universities. We're solving a very real problem for them. If you're a domestic student, there are 300 options for where you can get a loan. For an international student, there isn't. The universities have a real problem and we're solving that."

Ilian Mihov, the dean of INSEAD, said in a statement: "About 25% of our students are funded by Prodigy Finance loans and they come from all over the world, many from countries where it would be difficult to get a bank loan or other forms of financing.

"It's an important source of funding at INSEAD and helps contribute to diversity, as we have over 90 different nationalities represented. Diversity is essential to our DNA, as it's a source of creativity and understanding."

The $40 million in equity funding will be used to hire more staff in tech, engineering, and business development, Stevens said. Prodigy Finance is targeting expansion in America, where the business launched last year.

"We've been needing to increase our capacity to fund on the platform to be able to give more loans to more people, particularly in the US," said Stevens.

The majority of Prodigy Finance's loans go towards MBAs but Stevens says the company is increasingly branching out into STEM subjects and areas like law and public policy. "We'll look to expand into health sciences next year likely," he added.

Index Venture's Neil Rimer said in a statement: "Every decade, the number of international students doubles and our hope is that Prodigy Finance will help accelerate that growth. Our planet sorely needs more educated citizens of the world."